Start a business in Japan

If you set up your own business in Japan. You need to think about how you would pay Japanese income tax. If you were an employee, probably your employer did everything about your taxes. But now you are fully responsible for your taxes, so please do not forget about tax returns.

Start a business? Then 'Aoiro return'.

'Aoiro' means blue color, so 'Aoiro' return is Blue return. What is this? This is what you are able to reduce your tax payment, so this is one of the tax benefits you should get.

How much can I reduce a tax payment?

If your income is JPY 10 million, you may reduce approximately JPY 200,000 in taxes.

The amount depends on your income (income should be rental income or your own business income).

What should I do to get this tax benefit?

First of all, you need to get 'Aoiro status' so you need to file a 'Aoiro application form' to a tax office by the deadline (within two months after you start your own business).

After that, you need to use a double-entry bookkeeping system for your business transactions and produce a well-organised financial statement (Balance sheet & Income statement). In other words, your accounting records should be 'good'.

I have a loss this year, so don't need 'Aoiro return'?

Even if you have a loss, you can get tax benefits through 'Aoiro return'. Losses can be used to reduce your income in the next year.

Why you don't do 'Aoiro return'?

If you do nothing, you are now 'Shiroiro (white) return' status, and there is NO benefit. But now you know about 'Aoiro return' and get the tax benefits as explained.